Domestic Insurance Business Strategy
Hideo TeramotoDirector, Senior Managing Executive Officer
Summary
21
Three brands provide products to cater to the changing needs of our customers
Rebalancing product portfolio in light of the negative interest rate policy
Initiatives to strengthen core channel led to an increase in salesrepresentatives
“InsTech” initiatives, merging insurance business and technology
Three Brands Strategy: Domestic Life Market and Dai-ichiGroup
22
Bancassurance(level premium,
protection)
Walk-in insurance shops etc. Leaflet, direct mails
Direct, Internet
Leaflet, direct mails etc.
Sales representatives
Bancassurance(single premium,
saving)
Prefers comparison, simple products & procedures,
proactively seeking information
Prefers consulting for services with high value added
Agents
Eyeing the opportunity
Optimizing three brands and distribution channels to cater to the changing needs of our customersNegative interest rate policy make a limited impact
Customer characteristics
& products
Distribution channels
Main players
Market(maturity, size)
Immature, Small
Matured,Large
Relatively matured, Medium
Foreign & P/C Foreign & P/C players
Foreign, P/C & other new
players
Internet, foreign
players, mutual associations
Major playersBancassurancespecialists and major players
Foreign and P/C players
Protection / Medical / Saving(single premium / level payment)
Single premium saving(yen / foreign currency) Medical / Protection
Dai-ichi Life Group’s Reaction to the Negative Interest Rates
23
<Dai-ichi Frontier Life>Stopped sales of yen-denominated fixed annuity (Feb-16)Stopped sales of yen-denominated fixed whole life (Mar-16)
<Dai-ichi Life>Individual insurances & annuities
Reducing assumed rate of return on single premium whole life (Jan-16 onwards)Reduced availability of prepayment (Apr-16)Reduced discount rate on prepayment and return rates on claims deposit
Group InsuranceDefined Benefit: Control general account in-force and promote Separate Account Bond Fund and Separate Account Balanced Fund IIDefined Contribution: Promote sale of mutual funds
Shifting focus on protection-type products
Shifting focus on foreign-currency products
Dai-ichi Life: Targeting Young and Female Segments
24
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
1QFY Mar-16 1QFY Mar-17
Below 1010’s
20’s
30’s
40’s
50’s
60’s & over
+15%+19%
+7%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
1QFY Mar-16 1QFY Mar-17
below 1010’s
20’s
30’s
40’s
50’s
60’s & over
Total+1%
+17%+36%
+29%
+30%
+36%
+7%
Launched new products targeting young and female segments・Whole life medical for female (Jan 2016), term life with survival benefits (Apr 2016) etc.
Sales to senior segment declined as we controlled sales of single premium products in light of lower interest rates・Reduced assumed rate of return on single premium whole life.
No. of Policies by Age (Male)
Total+16%
No. of Policies by Age (Female)
(13%)(14%)
Dai-ichi Life: Rebalancing Product Portfolio
25
Assuming low interest rates environment will persist⇒Shifting Product Portfolio toward protection and medical
Sales of Single Premium Whole Life
• Customized plan for youth• Mixed media promotion
(television, web, SNS etc.)
• 100% deductible• Top-level account value at age 30s to 50s• Nursing care protection0
50
100
150
200
250
300
0
100
200
300
400
500
600
700
800
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016F
Premium revenue (LHS)
Number (RHS)
(billion yen) (thousand)
Additional incentives to the channel
Intensified training to develop protection market
Head office leading delivery of target customer info
New products launch
Promote sales of comprehensive protection package
Initiatives for young segment
Insurance for business owners
Dai-ichi Life: Strengthen Core Channel (Sales Rep.)
26(Notes) Sales force are as at the end of June. Number of new policies per sales representative is monthly average.
Sales force and productivity on the rise due to a change in training process (FY2015-2016)
43,991
42,447 41,957
43,502
5.66.2 6.3
6.6
2.0
3.0
4.0
5.0
6.0
7.0
8.0
39,000
40,000
41,000
42,000
43,000
44,000
45,000
1Q FY 2013 1Q FY 2014 1Q FY 2015 1Q FY 2016
Sales representatives (LHS) New policy per sales rep. (RHS)
<What has changed?> Training period expanded from two to five yearsCompensation to prioritize customer base expansionChange in training process (literacy in finance, improve sales pitch etc.)
(number) (number)
Dai-ichi Life: Strengthen Core Channel (Sale of DFL Products)
27
0
5,000
10,000
15,000
20,000
25,000
30,000
0
200
400
600
800
1,000
Apr May Jun Jul Sep (Plan) Jan (Plan)
No. of eligible sales rep. (RHS)No. of sales (LHS)
10x
3.5x
Sale of Dai-ichi Frontier products by sales representatives launched in last fiscal yearEligible sales representatives to be increased to 25,000 next January from current 2,600
Eligibility expanded
Eligibility expanded
Eligibility expanded
(number)(number)
Recognizing the Environment and the Direction to Take
28
(Note 1) Reduction in standard rate of return on level payment policies could lead to an increase in premium on savings-type products but make a limited impact on protection-type products.
(Note 2) A revision of life table could lead to a reduction in premium for death protection but an increase for medical insurance.
Accelerate price competition?
Changing business environment and competitive landscape
Pricing differ strategically company
to company
Companies focus on differentiation of
protection products
Customized premium based on analysis of medical big data,Focus on accumulating big data such as medical data and life log
Reduction in standard assumed rate of return※1
Revision of life table※2
Assumption of extended period of low interest rate after Brexit
Existing business model rendered obsolete by an advancement of ICT
Consulting for services and products with high value-added rather than simply competing on pricing,
Streamline business process
Merging Insurance Business and Technology
29
Insurance ×Technology
Guiding personally optimized proposal
(consultation, products, timing etc.)
Quick paperwork, Customer friendly,
Simple questionnaire
Value added leading to QOLProducts and services to
promote healthspan
(Note) QOL (Quality of Life): general well-being of individuals and societies based not only on wealth and built environment, but physical and mental health and social belongings
Initiatives Taken in Each Domain
30(Note) Indices developed by Japan Medical Data Center to measure health condition based on vital and medical receipt data of 1.6 million anonymous case
Healthcare domain
Healthcare domain
Underwriting domain
Underwriting domain
New products & services that promote extension of healthspan
Studying new product based on “Kenko Nenrei(note)” at Neo First Life
Participate in joint research on analysis and application of health data together with Kyoto University and other business partners
Plans use wearable terminals to accumulate health log of employees on company’s health insurance union
New products & services that promote extension of healthspan
Studying new product based on “Kenko Nenrei(note)” at Neo First Life
Participate in joint research on analysis and application of health data together with Kyoto University and other business partners
Plans use wearable terminals to accumulate health log of employees on company’s health insurance union
Analysis of medical big data to optimize underwriting and risk management
Joint research on development of diseases using IBM Watson technology
Gradual application of analysis on combined internal and external medical data to underwriting criteria
Streamline business process by clerical mechanization
Analysis of medical big data to optimize underwriting and risk management
Joint research on development of diseases using IBM Watson technology
Gradual application of analysis on combined internal and external medical data to underwriting criteria
Streamline business process by clerical mechanization
Initiatives Taken in Each Domain - continued
31
Keeping in touch with
technologies
Keeping in touch with
technologies
Marketing domain
Marketing domain
Securing access to the latest technologies (IoT, big data, AI, robotics etc.)
Investment in venture fund founded by Keio Innovation Initiative
Securing access to the latest technologies (IoT, big data, AI, robotics etc.)
Investment in venture fund founded by Keio Innovation Initiative
Guiding optimized consultation through analysis of big data
Provide Total Life Plan Designers sales leads for best product for the customer based on analysis of internal big data
Personalized proposal ideas based on digital marketing
Guiding optimized consultation through analysis of big data
Provide Total Life Plan Designers sales leads for best product for the customer based on analysis of internal big data
Personalized proposal ideas based on digital marketing
Position of Neo First Life
32
Customer initiated; prefer comparison, affordability, simple procedure
Banks Shops
Simple products
Immature, small
Competitive advantage based on coverage and pricing,
Competitive edge in “health”
The third brand after Dai-ichi Life and Dai-ichi Frontier Life to cater to the changing needs of customersHelps the Group expand customer base
Customer characteristics
& products
Distributionchannels
Market(maturity, size)
Starting with banks and shops, eyeing direct
channel
Gain of customers in the growing market
Direct
Neo First Life: Product Strategy of a Late Comer
33
Competitive edge in “health”Timely introduction of new products during the year with distinctive benefitsCompeting with reasonable pricing (economical yet value added)Balanced source of earnings (products other than third sector)
Non-smoker discount
Reduced underwriting standards
Products based on “KenkoNenrei(note)”
Aug-2015 Feb-2016 Planned in FY2016
Income protection insurance(with health discount)
Sep-2016
(Note) Indices developed by Japan Medical Data Center to measure health condition based on vital and medical receipt data of 1.6 million anonymous cases
Neo First Life: New Policies
34
Number of new policies underwritten during the first eight months to March 2016 was in line with the competition but was below our projectionMonthly sales this fiscal year averages 1.7 times that of initial seven months of prior fiscal year
0
2,500
5,000
7,500
10,000
12,500
15,000
0
500
1,000
1,500
2,000
2,500
3,000
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
Monthly Accumulative
FY Mar-2016 FY Mar-2017
AccumulatedNo. of monthly sales
Aug-Feb average
Apr-Jun average
FY Mar-2016Accumulated:
8,000
1.7x
Key Takeaway
35
Unique combination of three brands with diverse business lines provides resilience to a change in environment
Building industry leading business model with “InsTech”
Growing sales force together with productivity gain lead to top line growth